New rules come into force on EU public procurement and concession contracts

Procurement Update

On 28 March 2014 Directive 2014/24/EU on public procurement, Directive 2014/25/EU on procurement by entities operating in the water, energy, transport and postal services sectors and Directive 2014/23/EU on the award of concession contracts were published in the EU Official Journal. Member States in principle needed to implement these Directives by the 18th of April 2016.

On the 4th of January 2016, the Belgian federal government submitted a project law on public procurement to the Chamber of Representatives. On 9 March 2016 a project of law on the award of concession contracts was submitted. Deliberations on these projects of law are currently still ongoing. It needs to be noted that once the time limit for transposing a directive into national law has passed, any provisions of the directive which are capable of directly affecting the legal relationship between the Member State to which the directive was addressed and private individuals can be enforced by such individuals in the national courts.

Although concessions remained largely unregulated for a long time, the Commission considered it appropriate to introduce rules relating to the award of concession contracts. The introduction of specific rules needs to tackle legal uncertainty and distortions in the functioning of the internal market.

With regard to the scope of the new procurement Directives, the main novelties can be summarised as follows:

The Directives codify and soften the "in-house" case law;

The distinction between Part-A and Part-B services is abolished;

Only some specific services are subject to a light procurement regime based on transparency and equal treatment.

The Directives foresee in some interesting procedural changes:

The innovation partnership has been introduced which aims at facilitating the development of innovative products, services or works;

Constraints on using the competitive procedure with negotiation and the competitive dialogue procedure have been relaxed;

The competitive dialogue procedure is now also available in the utilities sector.

In order to simplify the public procurement procedure and to promote e-procurement, the Directives introduce new techniques and further clarify and widen the application of existing instruments:

The Dynamic Purchasing Agreement (DPS) has been simplified, it will operate in the form of a restricted procedure and its duration is no longer limited to four years;

Electronic catalogues are introduced and can be considered as a format for the presentation and organisation of information in a manner that is common to all the participating bidders and which lends itself to electronic treatment;

The concrete modalities for the popular technique of using a central purchasing body are now clearly explained.

Selection and award criteria have been slightly modified or clarified:

Non-payment of taxes or social security contributions should now lead to the mandatory exclusion of a candidate;

A contract may not be awarded if the selected tender does not comply with environmental, social and labour law;

All contracts will be awarded based on the most economically advantageous tender. This will cover any of the following bases: price, costs, and the best quality/price ratio;

Contracting entities can assess the costs using a life-cycle costing approach when this is indicated in the tender documents. Life-cycle costing is a tool which evaluates the costs of an asset throughout its life-cycle. The LCC approach typically favours the purchase of the most sustainable option;

With regard to selection criteria relating to educational and professional qualifications or professional experience, reliance on the capacities of other entities is only possible where the latter will actually perform the works or services for which these capacities are required.

The rules on abnormally low tenders have also been further clarified and developed. Contracting entities shall reject the tender if it is established that the tender is abnormally low because it does not comply with environmental, social and labour law established by EU law, national law or collective agreements.

Finally, the Directives codify the case law on modifications of the contract during its term, which undoubtedly will enhance legal certainty.

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DLA Piper is a global law firm with lawyers located in more than 40 countries throughout the Americas, Europe, the Middle East, Africa and Asia Pacific, positioning us to help clients with their legal needs around the world.